Venezuelan state oil company hit with sanctions over Iran trade

Washington announced sanctions on PDVSA Tuesday for selling gasoline to Iran. The action is unlikely to slow the flow of Venezuelan oil to its No. 1 customer, the US.

By
Jasmina Kelemen, Correspondent /
May 24, 2011

Carlos Garcia Rawlins/Reuters

(Read caption)
Children play at the headquarters of the state oil company PDVSA in Caracas Tuesday, the same day that the United States announced new sanctions the Venezuelan state oil company and six other smaller oil and shipping companies for engaging in trade with Iran in violation of a US ban.

While the sanctions will likely serve as fodder for an anti-imperialist tirade from Venezuela’s stridently anti-American President Chavez, the decision is unlikely to disrupt the flow of nearly a million barrels a day of oil shipped between Venezuela and its largest trading partner, the US.

Crucially for commodities markets, the sanctions will not prevent PDVSA from selling oil to the US or any other markets and do not affect PDVSA’s subsidiary, Citgo.

Oil market conditions were considered when tailoring the sanctions against PDVSA, said Deputy Secretary of State James Steinberg during a briefing. The punitive actions will cut off PDVSA’s access to US government contracts and import/export financing.

“Obviously, we consulted closely with the economic agencies, including the DOE,” said Mr. Steinberg, responding to questions on how they arrived at the list of sanctions.